Former San Diego City Manager Jack McGrory concluded his testimony in the city pension trial yesterday, after the judge cut off a barrage of questions from dueling attorneys.

“What are we doing?” asked Superior Court Judge Jeffrey Barton, interrupting as City Attorney Michael Aguirre and an opposing lawyer, Ann Smith, aimed a running volley of queries at McGrory.

The exchange focused on legal advice the city received 10 years ago after officials had secured approval for a plan to reduce annual payments to the pension system while increasing employee benefits.

Aguirre said the deal, along with a new underfunding plan in 2002, broke the law because pension board members who agreed to allow the lower payments stood to profit from the benefit boosts.

He argues that the judge should invalidate the deals and eliminate the two rounds of benefit increases, to the consternation of lawyers for four employee groups, who say the benefits should be maintained. The city's pension system developed a billion-dollar deficit following the creation of the benefits.

Barton has structured the trial in three phases, calling for evidence on the legality of the benefits to be presented in the final stage. Both sides, he said, failed to abide by that instruction while addressing McGrory.

Smith repeatedly objected to Aguirre's questions to McGrory in the former city manager's seven hours on the stand, saying the city attorney was seeking testimony on the legality issue. Yesterday she told Barton she had been “frankly left confused” by how to limit the arguments.

Barton said he understood, but urged her, Aguirre and the other attorneys to “resist the temptation” to slip in references that should be heard later. Once that happens, he explained, he has to let the opposite side pursue similar lines of questioning.

“Once the line gets crossed, there's nothing we can do about it,” Barton said. “The door is open.”

Smith walked McGrory, who designed the 1996 plan, through a number of documents that reflected the vetting it received, from discussion by the pension board to analysis from an attorney who specialized in fiduciary matters.

McGrory, city manager from 1991 to 1997, cited the “extraordinary level of earnings” enjoyed by the retirement system by 1996, when he said the fund logged $150 million in gains.

Given the investment success, he said, the underfunding plan allowed the city to better manage its increasing pension costs. Smith asked McGrory if at that time he ever had second thoughts about proceeding.

“I don't believe I did,” he said.

The doubters included two former pension board members. One feared putting a burden on future taxpayers, while the other wondered in a letter if the benefits had been held out as an improper inducement, Aguirre's central contention.

As Aguirre cited the conflict-of-interest issue, Smith pointed McGrory to a legal opinion that advised the city that pension trustees had done nothing untoward and had met their fiduciary obligations.

Dueling over the evidence led to the rapid-fire exchange that frustrated the judge. After Smith's cross-examination of McGrory ended, Aguirre opted to pose more questions, and as the city attorney finished, Smith stood up again. When Aguirre tried to take another turn, Barton had had enough.

The tension remained later when Aguirre called Judie Italiano, general manager of the city's largest union, the Municipal Employees Association.

Smith and another union attorney, Joel Klevens, objected to several of his questions. Aguirre argued that they were justified because he wanted to submit the proper evidence to avoid being accused of a “failure of proof” in the trial.

Italiano, whose union often has been the target of Aguirre's barbs, said her members believe the city, despite its well-established financial troubles, has enough money “to pay benefits well into the future.”